Almost every aspect of life in the twenty-first century involves the use of electric power. Electric power is generally transmitted by electric utility companies (hereinafter referred to as “utilities”) to the end users via a complex network of electric power generation and distribution systems. Utilities generate electric power in power plants using a number of different energy sources, including thermal energy, solar energy, nuclear energy, coal, gas, etc. Depending on the type of energy source used by its power generators, a power plant may produce one or more types of pollutants as a by-product of the various processes undertaken by the power generators to generate electricity.
For example, a power plant using a coal burning power generator produces carbon monoxide, sulfur dioxide and other pollutants, whereas a power plant using a nuclear power generator produces radioactive waste material as a pollutant. Due to the environmentally harmful effects of these pollutants, the amounts and types of such pollutants released by power plants is restricted by various regulations. In the United States, the environmental protection agency (EPA) regulates the type and amount of pollution generated by power plants. Utilities that operate power plants producing controlled pollutants in excess of the restricted amounts are generally required to pay penalties.
To control the amount of pollution, power plants use various types of pollution control strategies that either restrict the amount of pollutants produced by the power plants and/or process the pollutants before they are released in the surrounding environment. For example, a coal burning power plant generating sulfur dioxide may use a flue gas de-sulfurization (FGD) system to reduce the amount of sulfur dioxide output to the environment. Similarly, another coal burning power plant that generates nitrogen oxide may use a selective catalytic reduction (SCR) system to reduce the amount of nitrogen oxide output to the environment. Such pollution control systems require use of specific reagents, and therefore power plants using such pollution control systems incur additional pollution control costs. For example, the FGD system uses lime slurry as a reagent to reduce the amount of sulfur dioxide output to the environment, while the SCR system uses ammonia as a reagent to reduce the amount of nitrogen oxide output to the environment.
When determining which power plants to use and at what production level, utilities take a number of different factors into consideration, including the demand for power, the power generation costs for each of the power plants, etc. To minimize the cost of power generation, the utilities typically try to determine an optimum combination of power plants so as to generate the required level of power at a minimum cost. In doing so, utilities may use any of a number of sophisticated mathematical and forecasting models available for planning generation of electricity, including various computer programs generally known as economic dispatch programs, which allow the utilities to make decisions related to the operation of power plants.
Because utilities are generally not allowed to generate pollution above the limits provided by the regulating agencies, such limits are used by the economic dispatch programs as constraints when determining the optimal operating levels of the various power plants. However, because different types of pollutants produced by the various power plants require different methods of pollution control, each of these methods incurs different amounts of pollution control costs. Thus, when determining the optimal operating levels of power plants, it is also necessary to take into account the costs involved in controlling the pollutants.
For example, because coal is a cheaper fuel than natural gas, a coal burning power plant may produce electricity cheaper than a gas burning power plant, however, due to the cost of lime slurry or other reagents used by the coal burning power plant to control the amount of nitrogen oxide emissions, in some circumstances it may be more advantageous to generate electricity using the gas burning power plant than by using the coal burning power plant. Thus, economic dispatch programs should also take into account pollution control costs and levels of pollution outputs in determining the optimal allocation of load demands among various power plants.
The importance of the pollution control cost in determining the load allocation is further underscored by the fast developing pollution credit markets, where a power plant that generates polluting emissions in amounts lesser than regulated emission limits may be able to sell pollution credits to another power plant that generates polluting emissions in amounts greater than regulated emission limits. In fact, it is predicted that in near future, one of the world's most vibrant markets will be dealing with the emission credits for NOX, SO2, and green house gases where companies producing green house gases in amounts higher than their prescribed limits can buy emission credits from companies producing green house gases in amounts lower than their prescribed limits. In presence of such pollution credit markets, it is important that economic dispatch programs determining optimal allocation of load demand among various power plants take into consideration not only the pollution control costs but also the pollution control credits.